Sukhdev Singh Kang Vs ITO (ITAT Amritsar)
it is the claim of the ld A.R, that as the jurisdiction over the case of the assessee was undeniably vested with the Income Tax Officer, Nakodar, therefore, the Income Tax Officer, Ward-4, Phagwara who had no jurisdiction over his case had clearly traversed beyond his jurisdiction and wrongly reopened the case of the assessee u/s 147 of the Act. Supplementing his aforesaid contention, it was submitted by the ld. A.R, that as prior to reopening of the assessee’s case vide notice issued u/s 148 of the Act by the Income-Tax Officer, Ward-4, Phagwara the Income-Tax Officer, Nakodar who was vested with the jurisdiction over his case had over the period i.e 14.02.2012 to 11.08.2014 sought for information u/s 133(6) of the Act and otherwise qua the cash deposits figuring in the bank accounts of the assessee. It was submitted by the ld A.R that it was neither a fact nor the case of the department that subsequent to 11.08.2014 i.e. the date on which the last notice was issued by the Income-Tax Officer, Nakodar that the case of the assessee was transferred to the Income-Tax Officer, Ward-4, Phagwara, on the basis of which the department would had sought to justify the issuance of Notice u/s 148 by him. In the backdrop aforesaid facts, we fail to understand that as to on what basis the Income-Tax Officer, Ward-4, Phagwara had assumed jurisdiction over the case of the assessee and reopened the same u/s 147 of the Act, specifically when over the period i.e 14.02.2012 to 11.08.2014 the Income-Tax Officer, Nakodar who was vested with the territorial jurisdiction over the case of the assessee u/s 124(1) of the Act had by taking recourse to the powers that were vested with him u/s 133(6) of the Act, as well as necessary AIR verifications had been gathering the requisite information qua the cash deposits in the assessee’s bank accounts. On a perusal of the records, we find that the assessment had been framed by the Income Tax Officer, Nakodar vide his order passed u/ss. 143(3)/148, dated 26.12.2016 on the basis of the Notice issued u/s 148, dated 29.02.2016 and the “reasons to believe”, dated 14.12.2015 recorded by the ITO, Ward-4, Phagwara. Before adverting any further, we may herein observe, that as is discernible from the records, the Income-Tax Officer, Ward Nakodar prior to framing of the assessment vide order passed by him u/ss. 143(3)/148, dated 26.12.2016, had after receiving the case records merely proceeded with on the basis of the Notice u/s 148, dated 29.02.2016 that was issued by the Income-tax Officer, Ward-4, Phagwara. In our considered view, the invalid assumption of jurisdiction by the ld ITO, Ward-4, Phagwara u/s 147 of the Act could not have been validated by a simpliciter transfer of the assessee’s case to the Income-Tax Officer, Nakodar i.e the A.O who was vested with the requisite jurisdiction over the case of the assessee. Even if it is to be assumed that there was a transfer of jurisdiction over the case of the assessee from the Income-tax Officer, Ward-4, Phagwara to the Income-Tax Officer, Nakodar, then, in the backdrop of the fact that the Income-Tax Officer, Ward-4, Phagwara had de hors valid assumption of jurisdiction over the case of the assessee reopened his case, it was incumbent on the part of the Income-Tax Officer, Nakodar to have validly assumed jurisdiction u/s 147 of the Act by satisfying the requisite conditions which were sine qua non for framing of a valid assessment u/ss. 143(3)/148 by him. In sum and substance, it is a case before us where the Income-Tax Officer, Ward-4, Phagwara who had no jurisdiction over the case of the assessee had invalidly assumed jurisdiction and reopened his case, while for the Income-Tax Officer, Nakodar who was vested with the jurisdiction over the case of the assessee had after receiving the case records of the assessee framed the assessment vide his order passed u/ss. 143(3)/148, dated 26.12.2016 without validly assuming jurisdiction by satisfying the requisite conditions, viz. recording the “reasons to believe” and issuing notice u/s 148 of the Act which form the sine qua non for framing of a valid assessment within the meaning of Sec. 147 of the Act.
In our considered view, as the Income-Tax Officer, Nakodar had framed the assessment vide his order passed u/s 143(3)/148, dated 26.12.2016 without validly assuming jurisdiction u/s 147 of the Act, therefore, the same cannot be sustained and is liable to be quash subject of course to t he pending notices being ed. We, thus, in terms of our aforesaid observations quash the assessment framed by the Income-Tax Officer, Ward Nakodar, vide his order passed u/ss.143(3)/148, dated 26.12.2016.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
The present appeal filed by the assessee is directed against order passed by the CIT(Appeal)-2, Jalandhar, dated 09/01/2018, which in turn arises from the order passed by the Assessing Officer (“A.O”, for short) u/s 143(3) of the Income Tax Act, 1961 (‘Act’, for short), dated 26.12.2016 for A.Y 2009-10. The assessee has assailed the impugned order on the following grounds of appeal (amended) before us:
“1. The Learned Assessing Officer, has erred in assuming jurisdiction u/s 148. Not only are the reasons recorded wrong/incorrect, no effective verification of cash deposits was made from the assesse before issuing notice u/s 148. Even the reasons were not recorded by the jurisdictional Assessing Officer and the sanction obtained from the superior authority is not in order. The impugned order is bad in law.
2. The learned Commissioner of Income Tax Rs. 3,91,553 (Appeals), has erred in sustaining the addition of Rs. 11,50,000/- u/s 69/69A in respect of alleged unexplained deposits in bank account chargeable to tax u/s 115B BE The Learned Commissioner of Income Tax(Appeals) has erred in sustaining the addition of Rs. 12,00,000/- u/s 69/69A made towards unexplained income chargeable to tax u/s 115BBE which basically represented agricultural income.”
2. At the very outset of the hearing of the appeal, it was submitted by the ld Authorised Representative (“A.R”, for short) for the assessee, that the assessee had filed before us amended ground of appeal. Elaborating on the reasons leading to filing of the amended grounds of appeal, it was submitted by the ld. A.R that the ground of appeal No. 1 is in the nature of an additional ground which had been raised for the first time before the tribunal. It was further submitted by the ld A.R that though the ground of appeal No. 3 was raised before the CIT(A), however, the same had inadvertently remained omitted to be raised in the memorandum of appeal filed before the Tribunal. Adverting to his contention qua admission of the additional ground of appeal, it was submitted by the ld A.R that as he had therein assailed the validity of the jurisdiction assumed by the A.O u/s 147 of the Act, the adjudication of which was based on the facts available on record, therefore, the same may be admitted. In so far the ground No. 3 was concerned, it was submitted by the ld A.R that the assessee had inadvertently omitted to raise the same in his appeal filed before the Tribunal, although, the same was duly raised before the CIT(A).
3. Per contra, the ld Departmental Representative (“D.R”, for short) objected to admission of the additional ground of appeal of the assessee appellant. It was averred by the ld D.R that as the assessee had not assailed the validity of the jurisdiction assumed by the A.O u/s 147 of the Act before the lower authorities, therefore, he could not be now allowed to raise it for the first time in the course of the proceeding before the tribunal. After deliberating at length qua the aforesaid issue in the backdrop of the contentions advanced by the authorized representatives, we are of the considered view, that as the assessee by raising the additional ground of appeal had sought our indulgence for adjudicating a legal issue i.e validity of the jurisdiction assumed by the A.O u/s 147 of the Act, the adjudication of which would not require looking any further beyond the facts available on record, therefore, the same merits admission. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in case of CIT Vs. National Thermal Power Ltd. (1998) 229 ITR 383 (SC). In so far, the ground of appeal No. 3 raised by the assessee before us is concerned, we find that though the same was raised by the assessee before the first appellate authority, however, he had inadvertently omitted to raise the same in the memorandum of appeal that was earlier filed before us. Backed by the aforesaid fact, we herein find no reason as to why the same be not allowed to be raised before us. We, thus, in terms of our aforesaid observations allow the raising of the aforesaid respective grounds of appeal before us.
4. We shall now deal with the grievance of the assessee wherein he has assailed the orders of the lower authorities primarily on two fold grounds, viz. (i). the validity of the jurisdiction assumed by the A.O for reopening of the assessee’s case u/s 147 of the Act; and (ii). the sustainability of the additions made by the A.O on merits. As the assessee has thrown a challenge to the jurisdiction assumed by the A.O for reopening of his case u/s 147 of the Act, therefore, we shall first deal with the same.
5. Shorn of unnecessary details, the A.O as per AIR information in the case of the assessee gathered that he had deposited cash of Rs. 87.55 lakhs in his two bank accounts, as under:-
